Edited by M. Kabir Hassan
Chapter 3: Islamic finance in movement: public opinion in the Arab region
Islamic banking has been developing since the mid-1970s in peaceful competition with conventional banking. It has made significant progress in the Middle East and North Africa (MENA), where Arab Barometer surveys indicate widespread disapproval of interest-based lending and conventional banks in general. This chapter examines this data in order better to understand the characteristics of Islamic finance’s potential clientele. Shariah-compliant financial assets are steadily increasing as a percentage of commercial banking assets across most of the countries in the Muslim world where data is available. Driven by demand from wealthy Gulf investors, Islamic finance has steadily gained market share in many Arab countries, including Syria. Led by Malaysia, it is also gaining traction in Indonesia and other non-Arab countries having Muslim majorities. Even states with Muslim minorities, such as the United Kingdom, have Islamic banks catering to them. The grand total in the world of sharia-compliant financial assets, approaching $2 trillion, still, however, does not add up to those of a major American or Chinese bank. Although Islamic banking continues to grow more rapidly than conventional banks in most Arab countries, the sceptic may ask whether it really mobilizes new clienteles or simply diversifies the portfolios, as in the Gulf, of wealthy investors. This chapter examines the evidence, focusing on selected under-banked countries where Islamic banking may be attracting new participants and examines Arab survey data to discover the social and political characteristics of the people who might be most attracted to Islamic finance.
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